Universal Announces Plan to Lower CD Prices to $10 or Less

[George]

Sales of physical albums have steadily decreased over the past half decade, and now one major label is hoping to stem the decline by adopting a daring new strategy: lowering the price of CDs. Universal Music Group has revealed a plan to reduce the wholesale cost of their albums in order to decrease the retail price of single-disc albums to $10 or less, Billboard.biz reports. Under the new plan, sales of CDs will only boast a 25 percent profit margin, but UMG hopes the increase of CD sales volume will help reinvigorate their revenues.

While some may deem UMG's strategy as "too little, too late," the move does put the price of physical discs in line with what digital music services like iTunes charge for full album downloads, making physical discs a more attractive option. "We think it will really bring new life into the physical format," Universal Music Group Distribution president/CEO Jim Urie said. UMG revealed that they plan on selling more deluxe editions of albums, however those discs will carry a higher price tag.

While retailers are applauding the move, Billboard.biz writes that the other major labels aren't too pleased with UMG's price shift. "Why does Universal feel the need to get below $10?," a distributor at a competing major wondered. However, there is precedent for UMG believing their new strategy will work: When Trans World Entertainment, who runs music stores like f.y.e. and Wherehouse Music, tested out a $9.99 price plan, CD sales jumped 100 percent.

http://www.rollingstone.com/rockdaily/index.php/2010/03/18/universal-announces-plan-to-lower-cd-prices-to-10-or-less/

[Scarpia]

Have they said that this applied to classical recordings?  The economics are very different for pop recordings where the sales per title are high and the main costs are marketing and royalties and distribution.  In classical the production cost for the recording session is fixed and is often the main cost, so lowering the unit price might have a bigger impact on the balance sheet.

[Lethevich]

It's also kind of moot given how the classical majors now release almost nothing of interest...

[Scarpia]

It's also kind of moot given how the classical majors now release almost nothing of interest...

Except for re-releases, which are already at or below $10 per disc in many cases.

[Bulldog]

It's also kind of moot given how the classical majors now release almost nothing of interest...

Could you expand on "almost nothing of interest"?

[Lethevich]

Like when Decca or EMI were throwing out ten to twenty recordings of note every month, and now they struggle to manage one or two.

New recordings, that is.

[Coopmv]

Like when Decca or EMI were throwing out ten to twenty recordings of note every month, and now they struggle to manage one or two.

New recordings, that is.

Indeed, many of them just repackaged the same recordings umpteen times over the past decade ...

[Bulldog]

Like when Decca or EMI were throwing out ten to twenty recordings of note every month, and now they struggle to manage one or two.

New recordings, that is.

I looked at the new releases for DG, EMI and Decca.  Didn't see a thing I would want.

[The new erato]

Zilch here as well. DG reputedly had an exciting Bacewitz release with Pletnev and friends ready to launch but ditched it. There went my planned DG new release purchase of the year. Hope it resurfaces on a wiser label.

[71 dB]

It's also kind of moot given how the classical majors now release almost nothing of interest...

You mean classical dinosaurs? Interesting releases is a business of other companies nowadays.